SCOTS are keeping their savings in cash despite low interest rates and damaging inflation rather than venturing into nervy stock markets.

As UK shares braced again for the uncertainties of Brexit this week, with the FTSE 100 around 10 per cent lower than it was six and 12 months ago, caution holds sway for Scottish savers, according to new research.

Over a quarter of those with over £1,000 of investable assets hold more than half in cash, while a further 30% keep between 25% and 50% in cash, according to a report by Rathbone Investment Management.

Yet over the past year banks have paid their customers an average of 0.78% interest on savings while building societies have paid 1.01%, according to Savings Champion. Inflation during that time has been sitting at above 2%.

Evangelos Assimakos, investment director at Rathbones Edinburgh, commented: “Cash remains king among investors, despite the erosive effect of inflation. This is partly down to the economic and political uncertainty currently at play in the UK and wider afield. Many investors are clearly concerned about the impact that impending events such as Brexit will have on the markets.”

Investment platform Hargreaves Lansdown said this week that investor confidence was at an all-time low due to “uncertainty over Brexit and Trump trade wars”.

Mr Assimakos added: “Although it’s always prudent to maintain an adequate cash reserve, getting the right mix of cash and investments is crucial. Equally important is to invest in a suitably diversified manner across assets and regions to ensure you are taking the appropriate amount of risk with your money.”

For those with enough appetite for risk to back the band of Scottish companies currently listed on the stock markets, 2018 was a highly mixed year, according to analysis by Brewin Dolphin.

Scotland’s main market stocks dropped by 17% over the 12 months, against a 13% cent fall for the FTSE All-Share index. Scottish minnows on the Alternative Investment Market, however, fared much better across the board, with their shares up by almost 1% on average against a drop of 18% for the index as a whole.

The standout performer in the big league was AG Barr, whose stock was up by over 21%, but only three other Scots stocks - STV (7.3%), Scottish Mortgage (4.1%) and J Smart (1.4%) - were ahead in 2018. At the other end of the scale were Standard Life Aberdeen (-47.2%), CYBG (-45.6%) and Weir Group (-39.5%).

Scotland’s AIM constituents were buoyed by Beeks Financial Cloud ending 151.7% higher, while shares in Craneware (67.2%), Scotgold (59.2%) and Eland Oil & Gas (51.9%) also soared. But portfolios with the likes of IDE Group (-92.1%) or Quiz (-78.8%) would have suffered some pain.

John Moore, senior investment manager at Brewin Dolphin, said: “Scotland’s technology companies led the way in 2018 despite the wider tech sell-off, which began towards the end of the year. Financial stocks did not have a great 2018 across the board and it was no different in Scotland. Given the travails of the retail sector, it’s perhaps no surprise to find Quiz second from bottom.”

He added: “A volatile oil price over the course of the year didn’t hurt the likes of Eland Oil & Gas, Faroe Petroleum and Parkmead, but it did appear to have an impact on the oil services sector, which has largely struggled to recover from the initial oil price plunge in 2014.”

For anyone seeking safety in the promised remedies of absolute return funds there may have been disappointment. In the three years from 2016 to 2018 only 64 absolute return funds out of 105 delivered a positive return, and only one was ahead every year, according to AJ Bell. The investment platform claimed “so-called safe-haven funds have failed to deliver through the Brexit turmoil”. Four of the funds had lost money every year while Scottish pioneer the Standard Life GARS fund had delivered a three-year loss of 6.5%.

Scottish Friendly has warned of a “growing wealth gap” after its research found lower-income households at least half as likely to invest as those in higher managerial positions. Nearly one in three professionals such as lawyers, doctors, architects and accountants have invested into a stocks and shares Isa at some point, but the vast majority of savers in other occupations have never invested at all. Over 20% of senior managers invest regularly but only 8% of junior managers, 6% of skilled workers and 5% of other manual workers.

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